South Africa-based First Circle Capital is betting on the long-term impact of emerging financial technologies in Africa, especially for the inclusion of women. The women-led VC firm invested in Orca Fraud, which was founded by two female software engineers who were alarmed by the rapid escalation of cybercrime in Africa.
“With the explosive growth of digital financial services in Africa, cybercrime is a bigger threat than ever,” First Circle’s Selma Ribica and Agnes Aistleitner Kisuule said in an email.
Most African businesses, they added, have no cybersecurity protocols.
South Africa-based Orca has developed a fraud detection model that allows for continuous monitoring of transaction data, user identity verification and even fingerprinting.
First Circle, which makes very early stage investments, backed Orca’s $550,000 pre-seed equity round.
African context
Most anti-fraud systems available in Africa are designed by foreign companies, mostly for Western financial services firms.
“Their solutions have proven ineffective when faced with fraud cases in Africa (too many false positives), and their solutions are too expensive for many local fintechs and Financial Institutions,” Ribica and Aistleitner Kisuule observed.
Orca’s founders better understand local dynamics and needs, having previously worked for South African payments company Stitch and designed biometrics systems for South African banks.
Personal lending
First Circle also invested in Egyptian fintech venture MNZL, which provides affordable loans and credit to customers who stake personal assets as collateral.
About 40% of Egypt’s adults don’t have a bank account, and fewer than 10% have access to bank credit. “Despite these tight credit conditions, most Egyptian families own a major or significant asset,” Ribica and Aistleitner Kisuule said.
MNZL offers digital home-equity and auto-equity lines of credit. The model has worked in other emerging markets “facing similar constraints like lack of reliable data sources and large informal sector,” they added.
Other investors in MNZL’s $3.5 million round included P1 Ventures, Ingressive Capital,Flat6Labs, 500 Startups.
